Although hospitals have a right to issue legitimate bills, they must act more compassionately in the cases where relatives of patients dispute the inflated bills, said a division bench of Justices V M Kanade and P D Kode.
The court was hearing two petitions alleging detention of patients, making allegations against Seven Hills hospital in suburban Andheri and Prachin Healthcare Multi-speciality hospital at neighbouring Panvel town.
The lawyer for Medical Council of India said it had no control over hospitals.
The bench said it would frame the issue at the next hearing on whether hospitals have the right to detain patients or keep the bodies in this way.
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Another issue would be how long the hospitals can take to return the case papers to the patients or their relatives.
The High Court had remarked earlier that hospital spend a lot of money on medicines and treatment, and are justified in recovering the cost from patients, but their "high-handed behaviour" was unacceptable.
Government pleader Sandeep Shinde said hospitals did not have a legal right to detain patients; they can only file suits to recover the costs.
The court had on last occasion suggested that the hospitals should notify cost of treatment to patients in advance.